Discusses the legal requirements/options for joint venture/licensing in this market.

The Czech Republic has long been an attractive destination for foreign investors seeking manufacturing and assembly operations, most commonly through a green field investment. A smaller but growing group is foreign companies that seek to acquire existing Czech firms in order to obtain and further develop their innovative technologies. CzechInvest, the state investment agency, is trying to capitalize on this trend and has created the CzechLink program in order to facilitate the merger and acquisition of Czech firms in the manufacturing and IT sectors.

Joint ventures are less popular as a legal entity. There is no specific legislation regulating joint ventures in the Czech Republic and there is no such legal term in Czech corporate law, though the law allows for the setting up and operation of various joint venture schemes and structures such as contractual joint ventures and equity joint ventures. The legal framework between joint venture partners is usually defined in the joint venture contractual documents. The joint venture agreement usually describes the details of the partners’ agreement to establish and operate a joint venture, while the shareholders’ agreement regulates corporate governance and rules relating to the particular joint venture company. Additionally, there may be no joint venture agreement and the shareholders’ agreement will contain all the rights and obligations of the venture partners. Prague has a small, but skilled, local investment banking community, which can assist U.S. firms in structuring acquisitions or joint ventures.

The Czech Commercial Code allows for the licensing of technology, stipulating that “under an industrial property license, the ‘licensor’ authorizes the ‘licensee’ to exercise (intangible) industrial property rights (e.g. patents, trademarks) only to an agreed extent and within agreed territory, and the licensee undertakes to make determined payments or to provide other material values (payment in kind) in return.” The contract must be in writing and if the duration of the rights is idependent upon the exercise of the rights, the licensee is bound to exercise the rights.
 

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